Two recent legal actions have millions of global businesses worried that they could soon lose billions of dollars in similar litigation. The focus of these lawsuits? Asbestos.

Asbestos is a naturally occurring mineral with heat-resistant and insulating properties.

People have been using asbestos for thousands of years. Asbestos has been used commercially — for example, in mining, construction, shipbuilding, and the automotive industry — for more than a century.

It has been used to create products such as fire-resistant materials, insulation, floor and ceiling tiles and automobile brake linings. Many new uses were found during World Wars II and I.

When asbestos fibers are released into the air, the fibers can be inhaled and swallowed. It is believed that the fibers cause illnesses by irritating cells (in the case of mesothelioma, the cells of the pleura or peritoneum).

It wasn’t until the 1950s that a clear relationship between asbestos exposure and lung cancer was recognized; a relationship between asbestos and malignant mesothelioma wasn’t documented until 1960.

People exposed to asbestos are at greater risk for lung cancer than mesothelioma. In addition, the risk for lung cancer is 60- to 90-fold greater in smokers exposed to asbestos than in nonsmokers with similar exposure levels.

Asbestos exposure can also cause asbestosis (a chronic lung disease) and a number of other cancers.

Today, as many as 8 million Americans have had work-related asbestos exposure. People who work in any of the industries in which asbestos is used have an increased risk for all asbestos-related illnesses. In addition, family members of people with occupational exposure to asbestos have a small but significantly increased risk because the fibers can be carried on the clothing and hair of those exposed. Since 1972, people who work with asbestos are required to shower and change clothes before leaving the workplace.

Even people without these risk factors may have been exposed to asbestos, because asbestos-containing materials were used in the construction of many older buildings.

When these materials deteriorate, asbestos fibers are released into the air. The danger occurs if the material containing asbestos deteriorates or is in some way disturbed (for example, by construction or demolition). If you live in an older home and plan a remodeling project, you may need to hire experts to safely remove or encapsulate any asbestos in your home.

Incidence rates of malignant mesothelioma are expected to peak around the year 2000, as people who were exposed to asbestos in the 1950s and 1960s develop the disease (symptoms typically do not occur until 20 to 40 years after exposure).

The first salvo in the global business community’s potential war with asbestos-related litigation occurred in early May when the St. Paul Companies, the fourth-largest insurance company in the United States, announced that it could face a “substantial” claim from Western MacArthur Company, once a major distributor and installer of asbestos.

The second onslaught occurred last Thursday when the British House of Lords reversed a previous ruling and allowed victims of asbestos-related illnesses to be compensated by insurance companies.

The decision involved the Union of Construction, Allied Trades and Technicians, which brought the case in 1996 after the death of a union member from mesthelioma. The decision is expected to allow about 500 similar cases to proceed.

Insurers including Zurich Financial Group, CGNU PLC and New York-based American International Group may face a total bill of more than $12 billion, says the Association of British Insurers.

It is not known how much money St. Paul will be liable for, but filings with the US Securities and Exchange Commission show the company set aside $463 million for asbestos claims.

The company paid $52 million for such claims in 2001 and $42 million in 2000. Through March 31 of this year, it doled out $16 million.

Insurers are increasingly becoming the targets of asbestos-related lawsuits, as many manufacturers have declared bankruptcy. Many analysts and investors say the suits have become too widespread, and have called for reform of how civil lawsuits are handled.

“The trial bar is continuing to come up with new ways to extract money from insurers and their policyholders,” Eric Holmes, a money manager at Victory Capital Management, tells Bloomberg News. “Clearly, we need tort reform. Even the Supreme Court has said the problem can’t be solved by the courts and needs a legislative solution.”

While some observers say the St. Paul disclosure is uncommon, analysts who cover the company say it is a shrewd move designed to make certain investors aren’t surprised by possible losses in upcoming quarters.

Observers say the House of Lords ruling will only affect insurance companies with operations in Britain. They say most of these firms have set aside large cash reserves in anticipation of the ruling.

But insurance analysts acknowledge it is not clear what long-term effect the asbestos-related litigation will have on insurance company earnings and rates for business.

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